Tuesday, August 21, 2018

Financial empowerment: Teaching your kids smart financial habits

Money has always been a tricky topic. Parents
who wish for their children to have clear and sound ideas about money should
make sure that their children hear about it at home.

Teaching your kids about money will help them
get the relationship between saving and spending, have an understanding of the
value of money, and develop good financial habits along the way.

There are many ways to teach your children
about money, but here are five things you can do to raise financially smarter
children:

Start them early.

Children
are primarily influenced by their environment, so it’s good to start them on
financial literacy early.

Teaching
your kids about money doesn’t mean setting up a crash course on accounting for
preschoolers. Make the learning process as natural as possible, by taking
day-to-day activities and turning them into learning experiences. You
can start with toys, like coin banks and toy cash registers, which encourage
kids to learn basic math and money skills. Alternatively, you can also include
the use of money when tutoring them with their math homework!

Lead by example.

Taking
an active role in teaching your kids about financial literacy through baby
steps will ensure big payoffs in the future. Seeing their parents splurge on a
new gadget every month won’t help in getting kids to understand the value of
hard-earned money, but having them come along to a trip in the grocery store
where they can see the price differences of common goods may help them ask the
right questions and infer the smarter financial decision on their own.

Teach them the value of delayed gratification.

As
parents, it may be difficult to prevent your child from asking for something
they want so badly—and that’s normal. But delayed gratification is an idea that
children will have to be well-acquainted with. If your child wants to buy a
toy, for example, explain to them how much money is going to be left in their
savings if they buy and pay for the toy. By asking your kids questions like, or
“Is it worth it?” or “How important is it to you?”, they can better evaluate
their options and make better decisions. Coax them out of buying a trinket they
just saw at the store and get them to save the money to buy a toy they’ve been
wanting for months instead. Not only will they understand the value of money,
but they’ll also likely play with the toy for a longer amount of time because
they worked hard to get it.

Give them the power to make decisions.

After sharing what you can with your kids
about handling finances better, it’s important that they take your lessons and
apply them. Most parents give their kids piggy banks to try and encourage them
to save, but BPI-Philam Life Assurance Corporation CEO Surendra Menon had a
pretty unconventional approach.

He taught his then 9-and-a-half-year-old
daughter about finance by giving her seed money for investing. He also gave her
free rein over the stocks she wanted to invest in, in the process teaching her
the importance of facing the consequences of her decisions. While he and his
wife stood back and let their daughter take the wheel, Menon recounts seeing
her become more observant about everyday happenings around her, learning to
strategize ways to make the most out of her budget.

The moral of the story is not that you have
to be a CEO to teach your kids about finance. It is possible to recreate this
learning method with your kids, even on a smaller scale. In any given
situation, encourage them to get to know all of their options, and after a
thorough evaluation, have them decide on their own. This way, kids will learn
firsthand the importance of responsible decision-making and being accountable
for their actions.

Help them open their first bank account.

Introduce
to them the idea of banking and how a having savings account is a secure way to
keep and grow their money. When opening your child’s savings account, make sure
to bring them to an actual bank, and have them meet some of the people who work
there.

BPI’s
Jumpstart Savings lets you enjoy the convenience of the Scheduled Funds
Transfer facility which credits your child’s allowance from your enrolled BPI
account to theirs regularly. The regular transfer provides you a worry-free
means of ensuring that your child has allowance every day.

It
is also especially designed to instil the discipline of saving to your kids. It
comes with a Guaranteed Savings feature which holds a certain amount in their
account to protect their savings from impulsive withdrawals. They can also use
the debit card for mobile phone reloading via ATMs, giving you the peace of
mind that your children will never be out of spending resources in case of an
emergency.

Children
who learn money management skills early on have good chances of ending up in a
better position financially when they grow older. BPI is and will always be
your family’s partner in ensuring that your children have a secure financial
landscape ahead of them.

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I am a wife, a mother, a daughter, a friend..etc. I wear different hats in different strokes. I write to let my thoughts flow like a river. This is my way of expressing the deepest side of me. You may like me or hate me with what you can read here in my pages. But one thing is for sure, I do not sugar-coat a thing. What you can read is what you can get from me.